The Survive and Thrive Boomer Guide

Banks working hard to kill badly needed consumer financial protection agency

President Barack Obama is proposing that Congress establish a new Consumer Financial Protection Agency to regulate consumer financial products such as credit cards and mortgages, and to simplify disclosure on them.

After the financial mess that was spawned by Wall Street and the banking industry, the new agency is essential for the development and growth of our new economy in the United States.

However, the banking industry is set on killing the proposed new consumer protection agency.

The article "Banks Resist Push for Tighter Regulations" on the Miami Herald Web site reports:

Though virtually every cause of the nation's recent financial crisis was rooted in weak consumer protection, the U.S. Chamber of Commerce is leading the fight against the proposed agency on grounds that it would make credit less available and more costly. The American Bankers Association, the Independent Community Bankers of America, and the Financial Services Roundtable also oppose the measure.

Here’s what’s being spent to defeat the new consumer protection agency, according to the article:

The chamber said it's spending about $2 million on ads, educational efforts, and a grass-roots campaign to kill the agency.

The Center for Responsive Politics said that for the 2010 election cycle, commercial banks have donated almost $3.7 million to lawmakers – 54 percent of it to Republicans. Companies that provide credit have given about $1.4 million, 59 percent to Democrats. Mortgage bankers and brokers have given $581,423.

This massive lobbying effort by banks is unfortunate. Changes are needed to protect American consumers in their financial dealings.

David Arkush, director, Public Citizen’s Congress Watch Division, said in a statement supporting the new federal consumer agency:

For too long, financial regulators have been too cozy with the financial services industry that they were supposed to be overseeing. Moreover, no single federal agency focuses primarily on consumer protection for credit products.

Lenders have run amok, writing their own rules and creating a maze of unfair and predatory products that have harmed consumers and destabilized the economy. The lack of oversight and regulation, along with Wall Street’s unchecked greed, drove this country into its current financial crisis. Americans deserve an agency that will put their financial well-being ahead of the short-term profits of a few Wall Street banks.

The president’s proposal to create a new Consumer Financial Protection Agency will add much needed oversight of an industry that has run wild at great expense to consumers and homeowners.

Establishing an agency to protect consumers in their financial transactions is essential. Let your senators and representatives in Congress know today that you support this important consumer protection measure.

Copyright 2009, Rita R. Robison, Consumer Specialist

Are baby boomers changing their instant gratification habits?

Recently, when I took a trip to the mall while I was on vacation in Miami, I surprised to see the mall culture alive and well.

People thronged about two hundred stores offering every kind of goodie imaginable. I didn’t see a single boarded up business.

I wondered whether nothing has changed in these difficult economic times. Whether consumers, especially baby boomers famous for their conspicuous consumption, are continuing the shopping life style.

Later I heard a program from National Public Radio’s WBUR on “Our Delayed Gratification Era.”

On Point host Tom Ashbrook interviewed John Lehrer, science writer and contributing editor at Wired, who recently wrote an article for the New Yorker called “Don’t! The Secret of Self Control.”

Leher, author of “How We Decide,” described a 1968 study in which 4 year olds were given one marshmallow or an Oreo cookie and told if they could wait, they’d get a second one. The children rang a bell when they were ready to eat the marshmallow or cookie.

“Every kid decides to wait,” Leher said on the program. Some ring the bell right away, some in 2 minutes, and others in 2.5 minutes. Some wait 15 minutes.

High delayers are better at distracting themselves. They turn their backs on the treat or sing songs from Sesame Street.

During their senior year, the high delayers were studied again. It was found that they got along better with friends, were less likely to do drugs, achieved higher SAT scores, and were more even tempered.

“It’s a dramatic difference,” Leher said. “At the age of 4, will power is more of a predictor of success than IQ.”

Ashbrook wanted to know if low delayers could be taught cognitive strategies to build self control. “It could have big consequences nationwide.”

Walter Mischel, who conducted the tests and is now a professor at Columbia University, is doing research now to see if kids between 4 and 8 can be taught delayed gratification. Low delayers have lost skills to delay gratification and need interventions to get the skills back, he said on the program.

Mischel and his colleagues are hoping to identify the particular brain regions that allow some people to delay gratification and control their temper, reports the New Yorker article. They’re also conducting a variety of genetic tests, as they look for the hereditary characteristics that influence the ability to wait for a second marshmallow.

In American culture, people are used to buying on credit so they can enjoy things immediately. This behavior is sustained by how the brain works, Mischel said. It’s called temporal discounting. People focus on instant gratification not what will happen years from now.

It’s encouraging to think if we could teach a child to delay gratification, it could make a difference in spending patterns as adults, he said. However, at the moment, how teachable this is isn’t known.

Another guest on the program, economic historian Richard Sylla, professor at New York University’s Stern School of Business, said people aren’t currently “snagging” the stuff they normally would. They’re staying out of stores.

Americans were used to rising standard of living until 1990, and generally had been prosperous, said Sylla. In 1990, workers in India, China, and other countries all over the world began competing with U.S. workers.
 
When workers here saw their standard of living was stagnate, they kept their spending up by using home equity loans and credit cards and investing in the stock market and 401Ks. They thought they didn’t need to save.

People with nothing to do would go to store and buy something interesting to distract themselves.

Sylla said he thinks Americans can change. In 1980, President Carter urged Americans to tear up their credit cards during an inflationary period. During the Great Depression, President Roosevelt reassured Americans the banks were safe for deposits, and they began putting their money in banks again.

Mischel also believes people can change their spending habits. His research on psychology and the human mind shows people have plasticity and can change economic and social behavior. People are creatures of evolution and can and do change, he said.

It’s probably time for Americans to cut back, Sylla said. If they save, they’ll learn to get two marshmallows down the road. “A lot of security comes from savings.”

“The word is out,” he said. “People will benefit by saving more.” For example, if they lose their jobs, they’ll need savings for living expenses.

Americans will return to the way they’ve lived through history, Sylla said. The high consumptive lifestyle of recent decades will be abandoned. “I suspect we’ll go back to more delayed gratification."

Copyright 2009, Rita R. Robison, Consumer Specialist

Last-minute tax tips for baby boomers: Check for deductions you may have missed

Finally, I completed my taxes Wednesday.

Like last year, I went to one of the free sessions offered by AARP at my neighborhood library. Asking for help paid off. The computerized program was able to find deductions I’d missed. My return will be larger than I’d calculated.

Along with forgetting to include your social security number or writing it on the forms incorrectly, missing deductions is one of the most common mistakes taxpayers make, according to the article “The 11 Most Overlooked Tax Deductions” on the Kiplinger page of TurboTax.

Review these commonly missed deductions to see if they apply to you or a member of your boomer family or household:

1. State sales tax.
2. Reinvested dividends.
3. Out-of-pocket charitable contributions.
4. Student loan interest paid by mom and dad.
5. Moving expenses to take first job.
6. Military reservists’ travel expenses.
7. Child care credit.
8. Estate tax on income in respect of a decedent.
9. State tax you paid last spring.
10. Refinancing points.
11. Jury pay paid to employer.

See the article for details on each deduction.

Copyright 2009, Rita R. Robison, Consumer Specialist

Top 10 reasons for baby boomers to be optimistic

Yesterday’s post on the “Top 10 Baby Boomers Challenges” wasn’t upbeat. In these tough economic times, the problems can be great.

Here’s the other side of the coin, ways baby boomers can embrace new thinking and opportunities during the recession:

1. Reinventing yourself

A job loss or downsizing at your workplace can lead to the opportunity to look at what you really want to do in your work life. Doing research and finding companies or agencies that are hiring rather than only responding to ads are techniques that work even during a recession.

2. Reducing spending

Buying less and having fewer things often lead to a simpler and happier lifestyle.

3. Focusing your business

A recession offers the opportunity to slow down, examine your business, and make plans for the future.

4. Thinking positively

It promotes positive solutions and can draws things to you as in the Law of Attraction.

5. Investing opportunities

The financial crisis offers investment bargains if you have any new money to invest. Be sure to work with a financial planner to help you make wise choices in these unusual economic times.

6. Making different retirement decisions

Delaying retirement may have its advantages. You may be able to come up with a plan, such as moving to a lower-cost community with fantastic part-time employment opportunities, which will be better able to meet your retirement needs.

7. Improving health

Job changes and spending less may free up more time for exercising, walking, running, cooking nutritious meals, and learning relaxation techniques such as yoga. 

8. Contributing to the community

With the economy sagging and unemployment at record levels, you have the opportunity, through various community programs, to help those who have lost their jobs and homes.

9. Experiencing a more progressive society

With an administration in the White House that believes in pro-work, health-promoting policies and consumer protection, boomers can benefit from a federal government that serves them better.

10. Getting greener

Green projects and organic food sales are on the upswing. It’s a good time to consider green jobs, goods and services, and volunteer opportunities. Check green Web sites such as Green America, formerly Co-op America, Worldchanging, and Global Exchange for information on what’s happening. You won’t find many reports about green activities in the media.

Let me know your opinions. What do you see as opportunities for baby boomers today?

Copyright 2009, Rita R. Robison, Consumer Specialist

Top 10 baby boomer challenges

What are the top 10 difficulties baby boomers face today?

With the recession continuing, many boomers are stressed about money, jobs, and housing.

Here’s my take on the top 10 things worrying boomer consumers these days:

1. Setting a retirement date

With investment returns and housing prices down, many boomers are postponing retirement.

2. Keeping a job

Older workers are often the first to be laid off, so boomers have concerns about being able to remain in the workforce. Or, they’re unemployed and looking for work.

3. Declining health

As boomers get older, the chances of becoming ill – including developing a serious illness or having a heart attack – increase. 

4. Rising health care costs

Health care spending has risen about 2.4 percent faster than GDP since 1970. The Centers for Medicare and Medicaid Services project that by 2018 health care spending will be more than $4.3 trillion or $13,100 per resident and account for 20.3 percent of GDP. Meanwhile, the quality of health care diminishes, including an increased risk of getting an infection when you go to the hospital.

5. Dwindling home values

In 2008, home sales prices fell an average of 9.5 percent, the largest annual decrease in 39 years.

6. Handling family relationships

Tough economic times make it more difficult to visit with adult children and their families who are spread across the country. Or, adult children may need to move back home due to job losses and financial setbacks. 

7. Increasing costs and the inability to pay off debts

Costs are continuing to rise while raises and promotions disappear, making it more difficult to pay off credit card debt.

8. Decreasing leisure activities

With money tight, the opportunity for vacations and health club memberships are reduced. 

9. Increasing stress levels

More demands at work, less time to spend with family and friends, and the intrigues of social networking make it difficult to find a time to relax.

10. Increasing declines in environmental quality

Although the Obama Administration has plans to turn around the environmental destruction of recent years, the sweeping changes needed aren’t yet in place.

Let me what’s of concern to you as a baby boomer. 

Tomorrow’s post will discuss “Top 10 Reasons for Baby Boomers to Be Optimistic.”

Copyright 2009, Rita R. Robison, Consumer Specialist

More baby boomers delaying retirement, planning to work after retirement for health care benefits

Fifty-four percent of American workers will delay their retirement by at least one year due to the current economic situation, with 24 percent saying they’ll need to work more than five years.

The current economic climate is adversely impacting the American workforce, according to research by the U.S. Division of Sun Life Financial as reported on the Boomer Café. While the number of Americans who expect to work at least 20 hours a week after age 67 is largely unchanged, their reasons for continuing to work have dramatically changed.

Over the last 90 days, the most popular reason cited by American workers for why they’d continue to work past the traditional retirement age of 67 shifted from “to stay mentally engaged” to “earn enough money to live well.” While staying mentally engaged fell to the second most popular reason, the number of Americans who cite they’ll continue working “for health care benefits” rose from the sixth primary reason to the third most common answer, with 64 percent now listing it as a reason to postpone retirement.

See the article “Earning Enough to Live Well” for more information.

Copyright 2009, Rita R. Robison, Consumer Specialist

What President Obama and Congress need to do for American consumers

In my last post, I looked at what President Obama said in his Inaugural address about consumer issues and discussed the challenges he faces in corralling the country’s strong special interests.

Here’s what I think Obama, working with Congress, needs to accomplish for American consumers:

• Find a solution to the country’s massive financial problems.

• Help consumers who are facing foreclosure of their homes.

• Find effective ways to create jobs.

• Establish a health care system that works and provides coverage for all Americans.

• Curb the excesses of the pharmaceutical industry by putting a lid on their profits, investigating the harmful side effects of prescription drugs that are injuring and killing people, and fostering the use of less harmful alternative medicine techniques.

• Act quickly to halt the excessive fees and interest rates being charged by banks and credit card companies.

• Stop poor lending practices by banks and mortgage companies.

• Establish better regulation of financial services.

• Fund nonindustry-sponsored research on approaches for clean energy and implement programs based on the research.

• Reestablish the White House Special assistant for consumer affairs and/or create a federal consumer protection agency.

• Restore the budgets of federal regulatory agencies including the Federal Trade Commission, Consumer Product Safety Commission, Food and Drug Administration, and U.S. Department of Agriculture.

• Enhance the regulatory functions of these agencies so that our food, consumer products, and drugs are safe.

• Develop creative and effective ways for citizens to be involved in the decision-making of these agencies.

• Restore trust in the work of the federal government and its processes.

• Insist on transparency in all the work of the federal government including the regulatory agencies and White House staff.

• Ban the direct-to-consumer advertising of prescription drugs on television, in magazines, and on the Internet.

• Ban, establish a moratorium, or least require the labeling of genetically modified food.

• Require irradiated food to be labeled.

• Work with Congress to develop regulatory processes that will prevent the excesses under the George W. Bush administration that caused the collapse of the housing market and the stock market.

• Enhance environmental protections.

• Adequately fund programs for seniors including Social Security, Medicare, and Medicaid.

• Assist local and state governments in preparing for the needs of baby boomers as they age.

• Work to eliminate poverty and homelessness.

• End the wars in Iraq and Afghanistan so that money will be available for domestic programs.

• Support a congressional investigation of the crimes of the George W. Bush administration that will lead to the filing of charges against those who broke the law.

• Review recent telecommunication laws in terms of how they meet the needs of consumers.

• Figure out whether cell phones are safe to use and, if they’re found to be harmful, mandate that they be safe.

• Improve mass transportation throughout the nation.

• Work with local governments and the states to create compact, walkable communities so that Americans can walk to work and shopping areas.

I know this is a huge agenda, but American consumers are in need of drastic assistance after the gutting of consumer and environmental protections during the George W. Bush administrations.

Copyright 2009, Rita R. Robison, Consumer Specialist

Orman’s 2009 action plan offers great tips for baby boomers

When I was at the drug store, I couldn’t resist. I bought a copy of “Suze Orman’s 2009 Action Plan: Keeping Your Money Safe and Sound.”

Although the book offers many of the recommendations you see Orman make on her TV appearances, the book is a small, 209-page, easy to read guide with a question-and-answer format on what to do in these complex, stressful financial times.

She begins the book with a brief history on the financial crisis, saying it was caused by greed. I certainly agree with that.

Orman’s first recommendation is to pay off your credit cards. Then she recommends investment strategies, including her familiar warnings about not using your investments to pay off credit card debts or a mortgage.

Orman also repeats her familiar mantra about saving money. Make a budget and do it.

Her action plan also includes tips on what to do about your home, college costs, and a job loss.

I love Suze Orman. She emphasizes the basics of financial planning that I’ve written about for years. And she does it with passion and a great deal of caring about people.

Orman’s action plan book is one I recommend strongly.

Copyright 2009, Rita R. Robison, Consumer Specialist

Top 10 consumer stories of 2008

Here’s my take on the most important consumer stories of the year:

1. The sagging economy.
2. The collapse of the stock market, major banks, and businesses.
3. The end of the George W. Bush administration and its crippling of consumer, environmental, and energy regulations.
4. The rise in the cost of food.
5. The rise – and fall – of the cost of gas.
6. The high rate of home foreclosures.
7. The scandal of contaminated food and drugs from China.
8. The tightening of consumer credit.
9. The cost of the wars in Iraq and Afghanistan.
10. The continued lack of health care insurance for millions of Americans.

Let me know your opinions.

 Copyright 2008, Rita R. Robison, Consumer Specialist

Watch out for these top 2008 scams in the New Year

In a year of financial turmoil, con artists have revamped old scams and thought up new ones to bilk people out of their money. Charity and lottery scams also continued to be popular.

In its listing of the 10 worst scams of 2008, ConsumerAffairs.com left out the Bernard Madoff’s investment Ponzi scheme, which could result in $50 billion dollars in losses. Madoff’s scam was just too large to include in the list, Mark Huffman, who wrote the article, “Top 10 Scams of 2008,” said. It would dwarf all the others on the list and then some.

The ConsumerAffairs.com top 10 scams are:

1. Foreclosure rescue scam.
2. Unauthorized charges.
3. Work at home schemes.
4. Phony government official scam.
5. Financial meltdown scams.
6. Campaign 2008 scams.
7. Fake lottery scam.
8. Charity telemarketing scam.
9. EPPI Card scam. EPPICards are cards issued by the government for administering payments and benefits electronically.
10. Kevin Trudeau’s “Weight-Loss Cures They Don’t Want You to Know About.”

Be sure to avoid these scams in 2009.

Copyright 2008, Rita R. Robison, Consumer Specialist